Financial Accounting Analysis

This assignment presents a case study involving a company's financial performance. It includes two statements: a Statement of Profit and Loss revealing the company's net profit, and a Statement of Assets and Liabilities outlining its financial position. Students are tasked with analyzing these statements to understand the company's profitability, asset management, and liabilities.

HNBS 310 Financial accounting
(1&2)

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
PROJECT 1......................................................................................................................................3
Financial accounting...................................................................................................................3
QUESTION 1...................................................................................................................................3
1. Presenting Journal entries of each transaction........................................................................3
Journal entries.............................................................................................................................3
Ledger Account...........................................................................................................................4
Trial Balance...............................................................................................................................7
QUESTION 2...................................................................................................................................8
Profit and Loss statement ...........................................................................................................8
Statement of Assets and Liability...............................................................................................9
PROJECT 2....................................................................................................................................10
QUESTION 1.................................................................................................................................10
Bank Reconciliation Statement ................................................................................................10
QUESTION 2.................................................................................................................................10
Rectification statement..............................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Financial accounting is very important aspect for every organisation as it differs from
management accounting but had great hold on top management. The present report is giving
brief discussion about various business transactions with use of double entry book keeping and
must be able to extracting trial balance.
PROJECT 1
Financial accounting
Financial accounting is referred as system where financial information of any business is
gathered, presented, analysed and accumulated in standard formats. It is replicated as one of the
most specialized branch of accounting which is tracing financial transaction of organization by
applicability of standardized guidelines. It helps in utilizing accounting principles which are
established properly. The organisations which issues there financial statement on regular
schedule. In the same series it can be justified that every organization who has objective of
maximising its value for its stakeholders (Beatty and Liao, 2014). The reports of financial
accounting gives benchmark for identifying role and level of efficiency in context of
management and Board. The main objective is to give information which is required for taking
economic decision making process in sound manner.
QUESTION 1
1. Presenting Journal entries of each transaction.
Journal entries
The application of journal entry is to record various transactions related to business in
their specific accounting records. It could be traced in general ledger but usually in subsidiary
ledger which is bounded and briefed into general ledger. For creating financial statements for
specific business it is used. The objective for this book of account is to record every transaction
of business at minimum two places which is also replicated as double entry accounting. It is not
used for tracing common transactions such as billings and invoices because of availability of
different software because it creates accounting record automatically (Khan, 2015).
Date Particulars Debit Credit

01/06/16 Cash ac dr.
to Capital ac
65000
65000
2\06\16 Purchase ac dr.
to Accounts payable ac
8000
8000
07\06\16 Cash ac dr.
to sales ac
4000
4000
08\06\16 Accounts payable ac
dr.
to bank ac
5000
5000
14\06\16 Insurance ac dr.
to bank ac
75
75
15\06\16 accounts receivables ac
dr.
to sales ac
1200
1200
16\06\16 Purchase ac dr.
to Accounts payable ac
10000
10000
18\06\16 Computer ac dr.
to cash ac
3000
3000
20\06\16 Rent ac dr.
to bank ac
150
150
21\06\16 Cash ac dr.
to sales ac
10000
10000
21\06\16 Cash ac dr.
to bank ac
100
100
30\06\16 Expense ac dr.
to cash
30
30

Ledger Account
It is termed as record or account which is applicable for storing and sorting transactions
of income statement and balance sheet. It helps in representing formal ledger of financial
statements of organization with debit and credit account which is directly validating through trial
balance. It helps in providing full record of each financial transaction. The information related to
account has been held in ledger is required for preparing financial statements which consist of
accounts for liabilities, revenue, expenses, owner's equity and assets. It is considered as very
important book of account as it includes proper classification of business enterprise. In the end of
accounting period full information will be included related to full transactions (Macve, 2015).
Bank ac
Date Particulars Amount Date Particulars Amount
08/06/16 By cash ac 100
14/06/16 by insurance ac 75
to balance bd 5325 21/06/16 by rent ac 150
21/06/16
by Accounts
payable ac 5000
5325 5325
Cash ac
Date Particulars Amount Date Particulars Amount
01/06/16 to capital ac 65000 18/06/16 by expenses 30
07/06/16 To bank ac 100 30/06/17 by equipment 3000
21/06/16 to sales ac 10000 by balance bd 76070
21/06/16 to sales ac 4000
79100 79100

purchases/c
Date Particulars Amount Date Particulars Amount
02/06/16
to Accounts
payable ac 8000 by balance bd 18000
16/06/16
to Accounts
payable ac 10000
18000 18000
sales ac
Date Particulars Amount Date Particulars Amount
to balance cd 26000 07/06/16 by cash ac 4000
15/06/16
by accounts
receivables ac 12000
21/06/16 by cash ac 10000
26000 26000
accounts
receivables ac
Date Particulars Amount Date Particulars Amount
15/06/16 to sales ac 12000 by balance cd 12000
12000 12000
Date Particulars Amount Date Particulars Amount

08/06/16 to bank ac 5000 02/06/16
by purchase ac
8000
to balance cd 13000 16/06/16
by purchase ac
10000
18000 18000
Computer equipments ac
Date Particulars Amount Date Particulars Amount
18/06/16 to cash ac 3000 by balance bd 3000
3000 3000
capital ac
Date Particulars Amount Date Particulars Amount
to balance bd 65000 01/06/16 by cash ac 65000
6500 65000
Rent ac
Date Particulars Amount Date Particulars Amount
21/06/17 to bank ac 150 to balance bd 150
150 150
insurance expenses ac

Date Particulars Amount Date Particulars Amount
14/06/16 to bank ac 75 by balance bd 75
75 75
expenses ac
Date Particulars Amount Date Particulars Amount
30/06/17 to cash ac 30 by balance bd 30
30 30
Trial Balance
It is considered as list of closing balance which directly belongs to account of ledger on
specified date and it is known as first step for preparing financial statements. In the end of
accounting period it is prepared for assisting various financial statements. The balances of ledger
are separated in credit and debit balances. The accounts of assets and expenses appear in trial
balance at debit side and capital, liabilities and income account appear in credit side. It is
ensuring that each entry of debit is recorded along with corresponding entry on the basis of
double entry concept of accounting (Bruwer and Yolande, 2015). If sum of trial balance is not
agreeable then variation might be investigated and solved before preparation of financial
statements. It helps in determining and rectifying errors.
Particulars debit credit
Bank ac 5325
Cash ac 76070
Purchase ac 18000
sales ac 26000
accounts receivables ac 12000
Accounts payable ac 13000
Computer accessories
ac 3000

capital ac 65000
Rent expense ac 150
insurance expenses ac 75
expenses ac 30
total 109325 109325
QUESTION 2
Profit and Loss statement
The income statement is considered as one of major financial statement for assessing
organization's performance and financial stability. It represents all expenses and revenue of
organization at specific period as it replicates that organization had made or lost money over the
specified duration. This statement is reflecting yield of top line in to net income or bottom line. It
helps in measuring sales and expenses during specific duration as its main role is to take
aggregate of all sources of revenue and to exclude expenses on basis of revenue. It helps in
judging financial progress of organization within specified duration which is examined
(Gurskaya, Kuter and Andreenkova, 2017).
Particulars Amount Amount
Beginning stock 9500
Purchases 75000
Less: Purchase returns 1500 73500
Total sales 125000
Less: Sales returns 1000 124000
ending inventory 1000
Gross margin 42000
Depreciation cost 5000
Salaries and wages 13200
Rent and Rates 1500
add: outstanding rates 340 1840
bad debts 1200
less: provision (old) 934
add: bad debts (new) 650 916
Postage 900

Insurance 7500
exclude: prepaid insurance 411 7089
interest received 1000
Rent received 4850
Less: Unearned rent 490 4360
Total expenses 34305
Net profit 7695
Statement of Assets and Liability
Particulars Amount Amount
Bank 10594
Cash 340
accounts receivables 12500
Less: bad debts 650 11850
ending inventory 1000
Prepaid insurance 411
24195
Motor van 25000
less: depreciation cost 5000 20000
loan 100000
Total assets 144195
Capital 120800
less: Drawing expenses 5150
Add: net Income 7695 123345
Accounts payable 3900
Unearned rent 490
Outstanding rates 340 4730
accumulated depreciation 5400
5400
Total liabilities 144195